Miami
Herald

November 9, 2013

Rising
sea levels, falling real estate values

While
most residents in South Florida still have no worries that global
warming could dramatically lower housing prices, land-use attorney
Sam Poole has already developed a plan to sell his house in a
low-lying Fort Lauderdale neighborhood.

Poole
has heard some scientists predict that the first financial effects
are probably two decades away, and he wants to sell in about 10
years, well before panic sets in, assuming governments do nothing
quickly to combat climate change.

“I
don’t want to wait too long,” he says.

In
fact, some leading South Florida scientists project the first effects
are one decade away, not two, but Poole’s concern about sea
level remains a rarity among homeowners in South Florida, where
property values continue to boom in waterfront neighborhoods.

There
are hints, however, that the real estate industry is preparing for
change.

Len
Berry, director of Florida Atlantic University’s Center for
Environmental Studies, reports developers have quietly contacted the
university to check out projections of how much sea level will rise
in the coming decades as they look for future safe investments.

William
Hardin, a professor of real estate at Florida International
University, says he’s telling students, “If you truly
believe in global warming, you’re going to have an issue being
in real estate in South Florida.”

Jason
King, with the Dover, Kohl urban planning group in Coral Gables, says
the firm’s planners are now factoring in changing sea level in
work with developers.

King
reports mortgage lenders “are following the discussions very
closely” on sea level rise, as are many others in real estate.
“I can tell you they’re aware,” says King, “but
I can’t tell you anything’s changed yet.”

The
financial stakes are high. The Southeast Florida Regional Climate
Change Compact, a joint effort of four county governments, calculates
the area could lose as much as $4 billion in taxable real estate with
a one-foot rise in sea level.

At
three feet, the loss could be $31 billion — escalating from
there, perhaps at an accelerating pace unless governments and/or the
private sector act to reduce carbon and other gases warming the water
and atmosphere that in turn melts the ice caps and causes sea levels
to rise.

How
much longer?

For
many, the key question is when. “Give me a time,” asks
Jill Hertzberg, a leading Miami Beach real estate agent. She reads a
lot about climate change and has no doubt that it causes rising seas.
but “I don’t know what the direct effect is” on
Miami Beach.

She
says clients don’t mention climate change when they put down
millions for waterfront properties. “Waterfront is very
desirable.”

But
for how much longer?

The
most widely used projection is the Army Corps of Engineers’,
which sees a three- to seven-inch rise in South Florida by 2030, and
from nine to 24 inches by 2060. Those numbers are accepted by the
four-county Southeast Florida Compact.

Harold
Wanless, a University of Miami geology professor who’s long
studied climate change, envisions much worse — a rise of as
much as two feet by 2048, three feet by 2063 and 4.1 to 6.6 feet by
2100.

At
three feet, much of South Florida — including major parts of
far south Miami-Dade, Miami Beach, Dania and stretches of the western
suburbs — is under water.

“But
a lot of land is lost at six inches,” says Nicole Hernandez
Hammer, program manager of the Climate Change Initiative at FAU.
South Dade particularly losses major acreage with a six-inch
increase.

Hernandez
Hammer is amazed developers don’t appear to worry about rising
seas. “Look at Sunny Isles, with those giant cranes, building
these lavish structures that are essentially at sea level.”

Two
major Sunny Isles developers — as well as a half-dozen other
developers and real estate brokers — did not respond for
requests for comment.

Some
believe it could be a gradual decline — as people become fed up
with increased neighborhood flooding. Others, including many leading
scientists, believe that a huge hurricane could send the area reeling
— or perhaps it could be a crisis in insurance markets.

FAU’s
Berry says “10 years is a good marker” for seeing changes
in real estate, but it could be “a decade or two.” The
exact timing, he says, depends on when the region is hit by a
catastrophic storm that causes leaders and the real estate industry
to make tough choices on what areas should be rebuilt.

“A
lot of people in Broward think they’re safe,” says
Wanless, imagining a bad storm. “But three-quarters of Broward
doesn’t have a ridge, so that’s worse off than the ridge
areas of Dade.”

The
future looks even worse in Monroe County. A Southeast Florida Compact
report estimates the low-lying Keys could lose $2.8 billion in
property with a one-foot rise, far more than the projected maximum of
$828 million for the much larger Broward County.

Poole,
the land-use attorney, thinks property values might sink when
residents decide ever-increasing flooding is too much of a pain.

A
former head of the South Florida Water Management District, Poole has
studied flood zone maps. “My property is in no danger of
floating away,” even with a once-in-a-century flood. But much
of his Rio Vista neighborhood, east of U.S. 1 and south of downtown
Fort Lauderdale, is lower and could be devastated by frequent
flooding.

That’s
why Poole might sell in a decade, “unless the government starts
doing something to combat the warming trends.” That’s not
seeming likely for the near future.

King,
the town planner, says flooding can be fixed. He points to the $200
million Miami Beach is spending to stop flooding on South Beach for
the next 20 years, but many wonder how much more the city can afford
as water levels rise.

Many
experts suggest problems with insurance could start a decline in
waterfront values much more quickly. Congressional legislation last
year required major increases in flood insurance premiums, which for
decades have been subsidized. That means that ground-level homes in
the Keys could see their premiums increased from $2,500 to $30,000,
reports the Florida Keynoter — costs that could quickly drop
real estate prices.

Hardin,
the FIU real estate expert, says it may be unfair to homeowners to be
hit with such a rapid rate increases, but in the long run it might
make sense for insurance to gradually reflect the real costs of
building in areas likely to be frequently flooded as sea levels rise.

As
it is now, so many are complaining about rising premiums that
Congress is thinking of rolling back the increases. If that happens,
says Poole, it would be another example of the government subsidizing
waterfront properties when it should be discouraging them.

Where
to move

Looking
forward, some developers seek answers from FAU’s
environmentalists. “They’re looking for the most
desirable land,” Berry says — perhaps for development 15
years from now.

Berry
says the highest land is often around Interstate 95 and the railway
lines. But if a house is high and dry, Hammer says, it could still be
devalued if nearby roads and stores are prone to flooding.

FIU’s
Hardin says that in the long run, developing the highest ground in
South Florida might not matter if tourism evaporates along a
deteriorating oceanfront and the economy goes into severe decline.
“In that case, people will be looking to Orlando or somewhere,
where the jobs are.”

Meanwhile,
Plantation attorney Mitchell Chester warns that property sellers
could eventually be sued if they don’t warn prospective buyers
— “starting now” — that the property is
endangered by rising sea level.

“That’s
interesting,” says Hertzberg, the Miami Beach broker, “but
exactly what should I be telling clients?”

Chester
says the Legislature should come up with a standard warning clause,
similar to ones now for lead paint, but he acknowledges that state
lawmakers have yet to show any interest in climate change.

A
warning might scare away some buyers — but not all. Peter
Harlem, an FIU researcher, points out that Miami boomed in the 1920s
when developers sold swamp land to buyers who hadn’t seen it.
Perhaps, Harlem suggests, that could happen again.

“You
know, about a third of America ... doesn’t believe [in] climate
change. That’s a sure market to sell to.”